Activist Starboard Value accused Pfizer of threatening litigation against the company’s former CEO and chief financial officer in order to get them to break ranks with the investor’s nascent turnaround campaign at the pharmaceutical giant.

Starboard managing member Jeff Smith said in a Thursday letter to Pfizer’s board that the company or its advisors also “threatened” to claw back former chief executive Ian Read and ex-CFO Frank D’Amelio’s past compensation and cancel their unvested shares.

Smith asked that the board assemble a special committee to investigate the matter, describing it as “highly inappropriate, flagrantly unethical, and a significant breach of fiduciary obligations.”

The risk of legal liability was a driving factor in Read and D’Amelio’s public backing of Pfizer CEO Albert Bourla late Wednesday night, said a person familiar with the interactions between the company and the two former executives.

Pfizer shares slipped overnight as news of the two executives’ breakaway emerged, and opened down roughly 2.5% in Thursday morning trading.

Starboard’s Smith said that when the activist approached the two executives, both expressed “concerns” about Pfizer’s direction under Bourla and offered to help Starboard in its turnaround campaign.

Starboard did not respond to CNBC’s requests for comment. A Pfizer spokesperson declined to comment.

Smith and Bourla are slated to meet in person next week, Smith said, confirming earlier reports. The agenda of the discussion could not be learned, but people familiar with Starboard’s thinking previously said Pfizer’s focus on disciplined cost structure and mergers and acquisitions had suffered under Bourla’s leadership.

Former Pfizer CEO Ian Read and ex-CFO Frank D’Amelio said Wednesday evening that they would step away from Starboard Value’s campaign at the struggling pharmaceutical giant, just days after news of the activist’s stake broke.

Read and D’Amelio said they were “fully supportive” of Pfizer CEO Albert Bourla in a joint statement made via an investment bank and confirmed to be authentic. The duo had been in contact with a number of directors shortly before news of Starboard’s stake broke Sunday evening, according to people familiar with the matter.

“We are confident that over time they will deliver shareholder value,” the two former executives said of Pfizer’s current board and management. The company’s shares are essentially flat for the year and are off by roughly 50% from their 2021 highs.

The statement was made through Guggenheim Securities, which has long advised Pfizer on dealmaking. A representative for the bank declined to comment beyond the release.

The about face comes as Pfizer’s board grapples with the activist’s efforts, and just days before Starboard’s Jeff Smith was slated to meet with CEO Bourla, said people familiar with the matter. For executives to join, and then walk away from an activist’s campaign is highly unusual.

It was also not immediately clear what impact, if any, the breakaway would have on Starboard’s campaign. A representative for the activist fund did not immediately return a request for comment. Starboard, one of the largest and most tenacious activist funds, has amassed a roughly $1 billion position in the pharmaceutical firm, CNBC previously reported.

Jeff Smith, the managing member at Starboard, has previously mounted campaigns at Autodesk and Salesforce in recent months. While it typically focuses on the technology sector, it also built stakes in Starbucks and Wall Street Journal parent News Corp this year.

Representatives for Pfizer did not return requests for comment.

Activist investor Starboard Value has a roughly $1 billion stake in pharmaceutical giant Pfizer and is seeking to mount a turnaround at the struggling company, according to people familiar with the matter.

The activist’s exact plans could not be learned, but Starboard has approached former Pfizer CEO Ian Read and ex-finance chief Frank D’Amelio, both of whom have expressed interest in supporting Starboard’s turnaround, said the people.

Starboard believes that Pfizer’s current leadership under CEO Albert Bourla has stepped away from historically disciplined cost structure and investment in novel drugs, the people said.

Pfizer’s revenue and free cash flow ballooned during the Covid-19 pandemic, thanks to the company’s fast-tracked vaccine. But its stock has not done well, trading about 30% lower than it did in 2019. That is in part due to an expensive acquisition strategy — nearly $70 billion in M&A since 2020 — the return of which some analysts have questioned.

One particularly concerning deal was Pfizer’s acquisition of Global Blood Therapeutics. Pfizer pulled a drug for sickle cell disease it got just two years ago via the roughly $5 billion acquisition. The company played down the financial impact in September, saying the drug Oxbryta brought in a little over $300 million last year.

Read was Pfizer’s chief from 2010 to 2019 and inherited a company in tumult. But shares more than doubled during his tenure, as executives instituted that cost- and core-focused culture which it has now apparently moved from.

To be sure, the company has taken steps to tamp down on costs. It began a $4 billion cost-cutting program and then announced a second round of further cost reductions. Still, more than $100 billion in shareholder value has evaporated since the Covid-19 pandemic faded largely into the rearview mirror.

Starboard is run by Jeff Smith, and has historically focused on the technology sector. It is currently challenging News Corp’s dual-class share structure, and in recent months has mounted campaigns at Autodesk, Salesforce and Match Group.

The Wall Street Journal earlier reported news of Starboard’s stake. A Pfizer spokesperson declined to comment on “speculation and rumor.”

— CNBC’s Angelica Peebles contributed to this report.

Charlie Ergen is getting close to selling the pay-TV business he founded more than 40 years ago.

EchoStar is in advanced talks to sell satellite TV provider Dish Network to rival DirecTV, the closely held pay TV operator owned by private-equity firm TPG and AT&T, according to people familiar with the matter. While the sides hope to complete a deal by Monday, no deal is assured, and the talks may still fall apart, said the people, who asked not to be named because the discussions are private.

The combination of Dish and DirecTV has been rumored for years and nearly happened in 2002 until it collapsed under regulatory pressure. This time, the deal is being driven by EchoStar’s desire to pay off $1.98 billion of debt that matures in November, said two of the people familiar with the process. EchoStar had just $521 million in cash and cash equivalents and marketable investment securities as of June 30 and forecast negative cash flows for the remainder of 2024, according to public filings.

The prospect of a future EchoStar bankruptcy and deal approval from creditors make the completion of a deal complicated. Dish attempted to refinance some of its debt earlier this week with bondholders, but the negotiations failed, according to a Sept. 23 filing.

The company said in public filings it remains in discussions with other debtholders.

A potential DirecTV-Dish transaction is being structured as all cash, with DirecTV paying EchoStar for the satellite TV business, its digital business Sling and associated liabilities, said people familiar with the matter. All in, the transaction may be worth more than $9 billion, according to one of the people.

A spokesperson for DirecTV declined to comment. A spokesperson for Dish couldn’t immediately be reached for comment.

“The bottom line is that we now see bankruptcy in the next four to six months as the most likely outcome [for EchoStar],” MoffettNathanson’s Craig Moffett said in a note to clients in August. “They will need to raise new capital.”

EchoStar has a total enterprise value of about $31 billion and a market capitalization of about $7.6 billion. There is no wireless spectrum involved in the proposed deal, which Dish Network has spent the past decade accumulating in its quest to transition into a wireless company, the people said.

Satellite TV, once some of the biggest distributors of the TV bundle, has been declining for years — often at a faster rate than cable competitors — as consumers switch to subscription streaming services such as Netflix, Disney+ and Amazon Prime Video. Dish ended its last quarter with 6.1 million satellite subscribers and 2 million customers for Sling TV, Dish’s over-the-internet package of linear networks.

DirecTV has also felt the pain, losing millions of subscribers since AT&T bought the company in 2015 for $67 billion with debt. AT&T spun it out in 2021 and sold a portion of the company to TPG. At that time, DirecTV had approximately 15.4 million subscribers. It has about 11 million today, CNBC previously reported.

The company has recently been focused on building out its streaming business, centering its latest ad campaign around dispelling the belief that DirecTV is only available through a satellite dish. MoffettNathanson estimates DirecTV added more than 20,000 streaming customers earlier this year. The bulk of its customers still use satellite dishes.

Most recently, DirecTV was in a distribution fight with Disney, which saw networks including ESPN go dark for nearly two weeks for the satellite TV company’s customers. The two companies reached a deal that gives DirecTV the ability to offer skinnier, genre-specific bundles.

— CNBC’s Lillian Rizzo contributed to this report.